Recovered paper traders have accused the big three buyers in the sector of trying to force them out of the market by selling UK material into China at below-cost price.
Two long-standing UK paper exporters told MRW they believed the dominant buyers – Mark Lyndon, ACN and Cycle Link - were paying above the market price for UK recovered paper in order to control the supply market.
ACN said the small traders were naïve and, along with Mark Lyndon, denied using unfair practices.
Traders said the big firms, which are buyers for their Chinese parent firms, were buying up more material than their mills required and selling it on to third parties in China at below cost price.
“These companies have their own mills and that’s where they make their profit. They don’t have to make profits in the UK”, said one trader.
“The story is they don’t need to make a profit in the UK because they are raw materials sourcing offices supplying their mills. But that’s not true, because they buy a lot more than they need for their mills. I don’t think it’s fair trade at all”, he added.
Another said material prices set by the big players selling to third-party mills in China very quickly become the market price, “stifling” business.
The trader said while he was reluctant to call the practices “unfair”, the big buyers operated in a “big grey area between unfair practices and flexing [their] muscle”.
“One of the big players makes no qualms about the fact they don’t want traders in this business”, he said. “And as soon as they can, they will force us out.”
In an email to a Chinese agent seen by MRW one trader warned: “In the not too distant future [merchants] will have only 3 or 4 buyers/suppliers, all of whom will get together and destroy the market. They will push the price of the waste paper through the floor in the supply countries and put the competitive Mills out of business if they are allowed to continue in the direction they are going.”
Nick Watson, marketing manager for ACN Europe, the procurement arm of Nine Dragons Paper in China, said ACN had begun selling to third-party mills over the past two years, but denied “dumping”.
Watson said the consolidation of Chinese mills and the UK recovered paper sector, driven by many factors, meant bigger exporters needed more tonnes and smaller traders and brokers were struggling to compete.
“We’re not like a broker shipping one or two thousand tonnes, we’re an organisation that has to provide hundreds of thousands of tonnes a month. And it’s become a very competitive market”, he said.
“I’m afraid it’s just the economics of our industry, and if we need to pay that little bit extra, then we will do so.”
He said to blame the situation solely on pricing practices of the large exporters was “a little bit naïve”.
Paul Briggs, managing director at Mark Lyndon which buys a million tonnes a year in the UK for Lee and Man, said the traders were wrong to assume he would spend time and money trying to push them out of the market.
“If I was over paying, say £3 a tonne to get them out of the market that would cost us £3m a year.
“I’m shipping a million tonnes a year from the UK. So I need to be in the market presenting a price that will get me that million tonnes a year. Sometimes I have to pay a higher price than they do because I need more tonnes than they do.
“Frequently I come to market and find a small trader offering more than we are; but I don’t go bleating to you that they’re trying to put me out of business.”
Cycle Link declined to comment.
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